July 2009 NPD: Just who is winning anyway?

Well, the slowdown is here. There was a period, back last year, when hardware sales in the States seemed immune to the ‘global financial slowdown’ (or whatever they’re calling it this week), but with sales down across the board in July’s NPDs when compared to the same month last year, any idea that consumers aren’t being a little more prudent with their purchases has gone out of the window. In the statistics released on Thursday, finding anything to cheer about was easier said than done.

A quick look at the figures would appear to suggest that Nintendo is still firmly in charge, the DS and Wii selling 538,900 and 252,200 units respectively. But while the Wii seems to still be riding the crest of a wave, easily outselling both the Xbox 360 and PlayStation 3 month after month, in truth Nintendo must be a little worried about the console’s performance this year. Total sales from January to July number 3.28 million, again far ahead of the competition. But that’s a figure that represents a fall of just over 750,000 units from the same seven month period from last year, with most of 2009’s sales actually coming between January and March. From April onwards, the Wii has been performing rather poorly when compared to 2008, July’s figures alone representing a fall of well over 50 per cent, for instance.

That’s not the result of a steady ebb and flow. That’s verging on a crash.

Of course, the fact the Wii is still ahead of the pack despite this drop shows just how monumental a year Nintendo had in 2008, totally bucking seasonal trends and selling more than 600,000 units in eight of the twelve months. That’s unprecedented. Regardless, this year’s drop – despite notable releases such as this month’s Wii Sports Resort – surely represents the start of a general decline for the system. Some kind of action – whether a price-drop or a form of hardware update – will surely follow after Christmas, but it’s unlikely the system will ever hit 2008’s highs again.

A slightly deeper look at the figures, then, might suggest the Xbox 360 is the system with the most momentum right now. While July 2009’s figures were (very slightly) down on July 2008’s (202,900 this month compared to 205,000 units the same month last year), the 360 appears to be – on the whole – performing steadily, its 2009 total of 1.82 million units so far representing its strongest start to a year since the console launched.

The fact it’s (essentially) the cheapest home console on the market right now certainly helps, but it’s also the oldest (PlayStation 2 aside) and, to be outpacing all previous years in year four is a sign of a system in rude health. Most importantly, while the Wii has a lead of over 5.2 million units in the States despite launching after the 360, Microsoft’s system holds a lead of 7.65 million units over the PlayStation 3 in its home territory, growing almost every month. That’s not a gap that’s likely to be closed before generation’s end, and it’s also nothing to be sniffed at, the original Xbox never even coming close to challenging Sony’s previous two-generation dominance of the North American market.

Things (would appear) to be much tighter in Europe, but with Natal seemingly around the corner, there’s much to suggest that the 360 is only mid-way through its lifecycle right now, sales in North America that eventually double what its predecessor achieved a very real prospect.

The 360 could face a stickier Christmas period than last year, however. Exclusive killer-apps would appear to be a little harder to come by than in 2007 and 2008, and while the supposed price-drop of the Elite should make the system just as marketable this yuletide as it was last year, Sony’s pending PlayStation 3 price-cut has the potential to give those sat on the fence something to think about.

Indeed, you’d be hard pressed to suggest that any PlayStation 3 price-cut is likely to propel it ahead of the 360 this Christmas, but it’ll certainly make it much more competitive. It needs to, too. July’s tally of just 121,800 units sold puts it well behind the other two systems and also hangs it dangerously close to the 100,000 unit line. Back in 2007, three whole months passed without the PS3 hitting the 100,000 unit mark in the States, putting a halt on any early ideals Sony might have had to overhaul the 360 in quick time. Any hint of the console falling back to those kind of levels would no doubt make both retail and the development community rather nervous.

They might be pleased to know, then, that 2009’s total so far is leaps and bounds ahead of 2007’s drab sales over the same period, 1.24 million units sold in a healthy advantage over the 922,500 sold two years ago. But it does represent a fall from 2008, when Sony sold 1.83 million units in the same period upon the back of Metal Gear Solid 4 and Grand Theft Auto IV. A drop of almost 600,000 units is, perhaps, to be expected for the most expensive console on the market in such an economic climate, but it’s far from ideal when the PlayStation 3 is already a distant third in the States.

Just how much Sony shaves off the Slim’s price will be crucial – the rumours of a $299 price-tag will certainly win over those ‘umming and ahhing’ in recent months, but its unlikely to appeal to the massmarket – the market the console really should be targeting in its third year on sale. Make no mistake, it doesn’t matter how many optimistic analysts predict the PlayStation 3 eventually toppling both the Wii and 360, Sony’s latest is never going to sell the kind of numbers the record-breaking PlayStation 2 managed in its heyday. In the U.S., Sony’s focus should be on making the console a respectable contender by the end of this round of the ‘console wars’ to give whatever follows a good base, lest it have to produce the kind of dramatic turnaround Nintendo managed with the Wii after the GameCube was left out in the cold.

It’s, of course, entirely possible that the PlayStation 3 will find a firmer footing in the States over the next couple of years – the appeal of the PlayStation brand remains largely intact, despite Sony’s own efforts to dismantle it over the last three years. But that price-cut can’t come soon enough. It’s going to be an interesting winter.